Wednesday, July 7, 2010

Carbon Tax in the European Union's Future? European Commissioners Discuss Carbon Tax, But no Decision Yet

Discussion of a possible European Union carbon tax emerged again recently as the EU's executive body, the European Commission, considered whether to propose legislation to tax carbon emissions.

According to euobserver.com ("EU Carbon Tax Kicked Into the Long Grass," June 24, 2010), the proposal provides "[F]rom 2013, sources of greenhouse gases that are not currently covered by the EU's flagship environmental endeavor, the emissions trading scheme -- sectors such as agriculture, as well as transport and households -- would see a flat minimum fee of between 4 and 30 euros per ton."

The story went on to report that, "One clear line did emerge from the debate, which was that the commission backs a common EU carbon dioxide minimum taxation rate, so member states would not compete amongst each other in offering less onerous rates."

However, the steps in actually moving from a commission discussion of the tax to actually getting it enacted into law are formidable and perhaps even impossible. If the commission does agree to submit a proposed piece of legislation the measure will need to be approved by the European Parliament (not entirely impossible) and then by the Council of the EU. It is at Council level that the real difficulty will be encountered by proponents since the Council -- made up of the ministers responsible for taxation in the 27 member states -- will need to vote unanimously to approve the measure. This is nearly tantamount to impossible.

Nevertheless, while the U.S. becomes more and more bogged down in its own energy legislation, the matter of a carbon tax in Europe should enliven things if only just a little. It does seem worth wondering what the reaction among Europeans might be if they knew that household activities might be subject to a carbon tax.